Does Pre-Settlement Legal Funding Affect Attorney-Client Privilege?

The justice system in the United States moves slowly. This slow movement results in a significant need for legal funding to help lawsuit victims who cannot work or have no income to meet their financial needs. Pre-settlement funding is one solution for someone in this situation.

If you are struggling to pay your bills or need cash to cover your daily expenses during the pendency of your case, you might be considering a lawsuit loan. Depending on your state and the stage of your case, pre-settlement legal funding may or may not affect attorney-client privilege.

This article will cover if pre-settlement legal funding can affect attorney-client privilege so you can decide if you should apply for one.

Does pre-settlement legal funding affect attorney-client privilege?

No. With the exceptions of a few states and if the lawsuit is in trial, pre-settlement legal funding does not affect attorney-client privilege. Any information shared with Baker Street Funding is protected by attorney-client privilege and cannot be disclosed to anyone.

Legal funding companies protect clients with non-disclosure agreements, which minimizes any risks of disclosing attorney-client privilege information to the defendant.

When is it required to disclose information about my case?

You may have to disclose pre-settlement legal funding to the defendant on two occasions.

1. In Utah and Wisconsin, pre-settlement legal funding affects the attorney-client privilege since state laws require that you disclose that you received funding from your case. However, that is not necessarily the worst thing in the world. If the defense is the reason you seek funding, the fact that you had to seek money to tide you over during your case due to the other side’s negligence for your needing to seek legal funding in the first place, disclosing that information would hardly break your case. 
2. Also, a defendant can request the disclosure of a legal funding agreement during a trial, and the judge will ultimately be the one to make that final decision. 

Why is my case information needed for a pre-settlement legal funding application?

Pre-settlement legal funding is non-recourse lending, meaning the lender cannot seek repayment from any source except the proceeds of your case. 

The application process requires detailed information regarding your claim that only your attorney can provide. Before deciding to approve the loan to you, the lender will mainly rely upon the details that your attorney will share regarding your claim. This is why your lawyer is required to participate in the funding process and provide this information to the lender in order to decide on your application.

Some of the information lenders ask for might include insurance information, the judge presiding over your case, medical treatments, the jurisdiction where your case is pending, and your attorney’s candid assessment of your case.

Ultimately, given that legal funding is non-recourse, and lenders only get repaid if there is a compensation payout for that case, evaluating the strength of your lawsuit is one of the most critical factors a pre-settlement legal funding lender uses to approve or deny an application.

What is attorney-client privilege?

Attorney-client privilege is a legal concept that protects anything you tell your attorney or vice versa from disclosure to a third party. Attorney-client privilege is nearly absolute; there are very few circumstances in which it can be overcome to require that either you or your attorney disclose something that the other told each other. 

The purpose of the privilege is to encourage litigants to be completely honest with their attorneys and vice versa. After all, an attorney may not be able to give you the best legal advice possible if you cannot be 100% honest with them.

Attorney-client privilege only applies if you maintain the confidentiality of the information at issue. Thus, for example, if you tell your best friend something critical about your case that your attorney told you, then the privilege would be waived, and that information would no longer be protected from disclosure by the attorney-client privilege. This would mean that the other side and/or its attorney could obtain whatever information you disclosed to your best friend because you disclosed that information to them. 

The takeaway

Many plaintiffs and, in particular, their attorneys are understandably concerned about having to disclose information that the attorney-client privilege may otherwise protect during the pre-settlement legal funding process.

At Baker Street Funding, we take the confidentiality of any and all information that you and/or your attorney may share with us extremely seriously. As a part of our lawsuit loan application process, Baker Street utilizes a non-disclosure funding agreement, pursuant to which we agree that any information shared with us will remain confidential and thus does not affect attorney-client privilege. Baker Street Funding takes the importance of maintaining the confidential nature of any legal privilege information that is shared with us extremely seriously.  

Apply for pre-settlement legal funding today and find out how easy it is to remain confidential.